From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Fri Feb 01 2008 - 16:18:11 EST
Hi Dave You: To begin with the fundamental: The very notion of productive/unproductive economic activities implies that the former is 'necessary' or 'basic' in some specific economic sense since a fraction of its surplus support supports the unproductive ones. Me: Marx's argument is rather different. It has nothing directly to do with the surplus product, but with surplus labour. Both productive and unproductive workers (however defined) perform surplus labour for the benefit of the owning classes. The productive workers could not survive without the unproductive workers, and they could not even produce without them. So the reference to "support" is irrelevant. You: By definition, unproductive activities are a drain on the social surplus product. An expanding unproductive sector of the economy must be supported by more surplus labour in the productive sectors. These are all historically invariant concepts, applicable to any mode of production, not merely capitalism. Me: But a drain for whom, that is the question. Unproductive workers in the rich countries "drain" income and assets from elsewhere to their employers and themselves. With the aid of financial intermediation, poor countries export more and more goods to rich countries while the disposable income, and consequently consumption, of the people that produce them stays more or less the same. The total world surplus product rises, because the exploitation rate of labour rises. So whether or not an expanding unproductive sector must be supported by more surplus labour in the productive sectors depends entirely on the conditions of trade and the nature of activities. In historical materialism, there are these "historically invariant concepts applicable to any mode of production" but that has nothing to do with Marx, and any bona fide anthropologist or archaeologist would laugh his head off at that notion. Marx's categories are historical categories, dialectical categories abstracted from historical processes which are studied in detail. Marxist categories are fixed Weberian categories superimposed on history. The fact that a category is transhistorical does not mean that it applies at all times and places, nor does it imply that it has an identical meaning or significance in all times and places. You: If we only consider capitalistically employed people for a moment, the same applies. A growing unproductive business reduces the profits left for reinvestment in the productive firms. Me: Any banker or investment analyst can tell you that is simply not true. For one thing, a growing "unproductive" business can make a lot more trade possible, resulting in more profits for reinvestment by productive business. For another thing, markets cannot even function for a day without a lot of non-market labour. As Marx himself notes, unproductive business can reduce costs for productive business, adding to the profits of productive business. The costs may be substantial, but the profits are even more substantial, which is why this set-up continues. You: After this assertion one naturally asks: Do such sectors exist? Adam Smith and Karl Marx both thought so but neither gave a formulation that was precise enough. However, Smith's observation that "a man grows rich by employing a multitude of manufacturers but grows poor by employing a multitude of menial servants", points to something important. Me: What Smith was talking about was, menial servants who clean up a man's house for him - a kind of labour from which a man makes no money (it may cost him money). But if a man hires menial servants for the pursuit of a business from which he makes money, that is a very different story. In that case, he grows rich from employing menial servants. In that case, the idea that the labour of menial servants is intrinsically "unproductive" is a prejudice. From their surplus labour, a lot of capital is realised. We live today in a society which contains the results of the accumulation made possible by at least ten generations of workers. It is an enormous stock of assets which must continually be maintained. Admittedly, the labour of maintaining that stock of assets usually does not make a net addition to those assets. But can you seriously say it does not create wealth? If that labour was withdrawn, the whole stock of assets would deteriorate and cave in. There is no point in possessing wealth if the wealth disintegrates before your very eyes because there is no living labour continuously maintaining it and repairing it where necessary. To maintain wealth takes continual creative activity. You: You ask: "If the soldiers are part of a private army which is a profitmaking corporation, why aren't they capitalistically productive workers? If the producers of royal luxuries are hired by a profit making company, why aren't they productive workers?" They are surely profitable for the firms that employ them but when one looks at the economy as a whole things are different. This may not be easy to see, that is why I suggest we adopt the historical-materialist approach and look at who produces and appropriates goods and labour *before* looking at prices and profits. Me: But you are confusing a lot of issues here. The workers of the military and luxury corporations produce surplus value with their surplus labour, because surplus labour is the substance of surplus value. Implicitly you argue that surplus value can be embodied only in tangible goods, which the military and luxury workers may or may not produce. But at least Marx's concept of surplus value does not refer to tangible goods, it refers to the value of surplus labour which is realised in money through sale of its alienable products. When Marx explicity defines the concept of surplus product, he says clearly that it is determined by the relationship between necessary labour and surplus labour, and nothing else (Capital Vol. 1, Penguin ed., p. 338-339). As regards productive and unproductive labour in the capitalist system as a whole, the only relevant question is whether a particular labour activity adds to the total mass of surplus value or not, and why. The fact that the extraction of surplus labour may not make any net addition to tangible wealth, is a separate point of critique. Surplus value does not by definition require tangible goods in which it is contained, it requires surplus labour, the alienable result of which - whatever it is - can be realised in money. So long as there is surplus labour which can be realised upon sale of its product, there can be surplus value, whatever the particular outputs of that surplus labour. However, in Cap. Vol. 2, the implication is drawn that if no net new value can be created by operating acts of exchange in themselves, then the labour that operates this is unproductive, to the extent that it makes itself no net addition to the mass of surplus value, it creates no net additional value. What the circulation costs are, and how the labour involved is organised, depends of course entirely on the division of labour, and the division of labour determines whose cost it will be. But why does no value get added in the exchange process? You could argue that person A pays person B $5 for a good or service X and they exchange, there is still only one good or service X. The good or service took a certain amount of labour to produce, and that is its value. The fact that A and B exchanged it, does not alter that labour cost and it does not alter the quantity of X. So far so good. But the final cost of $5 may include circulation costs of $1, and these costs include the labour costs of circulating X. The question you then have to answer is why X, which upon final sale contains the circulation cost of $1, has not increased in value nevertheless during the exchange (it might have cost $4 before the exchange). The only answer I think there can be, is to say that the value of X is determined, and exists quite independently, of its price. The final price includes the circulation costs, but the circulation costs are not part of its value. So far so good. But the argument is that owner A is able to appropriate value (or surplus value) through sale to B by charging circulation costs. The question then is, how can he do that, if the circulation costs are not even part of the "value" of X? Somehow A appropriates "value" from a sale involving a change in the price of X, the differential not even being part of the value of constant capital. What is it then - a faux frais of production? You: The tale of the King and his subjects is a simple but good place to start. It turns out that the soldiers and craftsmen were unproductively employed by the King, they had to be supported by the surplus labour of the peasants. Me: I could equally argue that the soldiers produced security, and the craftsmen produced jewellery for the King, for which they were paid, so they supported themselves. In addition, they used their wage to buy products from the peasants, so they supported the peasants as well. The peasants supported the King, because the King supported the peasants by protecting them with his soldiers. Okay, you may argue that the three classes also had different interests; they both competed and cooperated according to those interests, but out of this set-up the whole system was self-supporting and thus feudalism did not disintegrate instantly. You might argue, yeah but the King, the craftsmen and the soldiers depended on the peasant's food to live at all. This is true, but if the craftsmen and soldiers did not buy their food, and if the King did not protect the peasants with his soldiers, the peasants would have no income and in fact there might not be any food produced at all, because they were plundered and wrecked by marauding robber barons. You might argue this is all a silly story, but it is a silly story because you have not investigated the real history of the King, the soldiers, the craftsmen and the peasants at all. You have just assumed a one-way dependency of the King, the craftsmen and the soldiers on the peasants, but this is purely arbitrary. The same story can be told if we replace the King with the capitalist class as a collective, the soldiers with private guards, the craftsmen with workers producing luxury yachts and the peasants with workers who produce the means of consumption and production. But here your story degenerates in the crudest caricature of historical analogy. I would accept that from a 5 year old child, but not from an intellectual quite capable of understanding the difference between feudal relations and capitalist relations. I am sure you can tell a story, the question is whether the story holds any water at all or whether it is a fairytale. I am likewise sure that your faith in the doctrine of historical materialism is sincere, but what we need here is a substantive, logically solid argument about how value can be transferred in exchange without altering in magnitude, in any and every given case of exchange. And that is just for starters. Jurriaan
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